eBay seller loses gray goods case

Bose Corporation v. Ejaz, No. 12-2403 (1st Cir. Oct. 4, 2013) 

Bose won summary judgment on its breach of contract and trademark claims against Ejaz, who sold home theater systems made by Bose for use in the US to other countries, to take advantage of higher retail prices abroad.  Ejaz sold American products in Australia even though he signed an agreement settling a UK case promising not to do so.  (Query why this is infringing conduct under US law.)  The district court found him liable under both claims and the court of appeals affirmed.  Ejaz argued that there was a genuine issue of material fact on likely confusion because differences between the products intended for particular countries were trivial, and his eBay customers would have been aware of them.  And here’s where I suspect the conflict of laws could come in, though I don’t know the relevant Australian law: In a gray market goods case, “a material difference between goods simultaneously sold in the same market under the same name creates a presumption of consumer confusion as a matter of law.”  Bose identified several material differences between its Australian and American products: region coding for DVDs; electrical power requirements; remote control capabilities; warranty durations; and design and functionality of the products’ radio tuners.

Though Ejaz argued that his actual consumers weren’t confused, the court didn’t consider that relevant, since the law requires only “likely” confusion.  Ejaz’s only evidence was his own affidavit asserting that based on his experience, eBay customers are “primarily bargain hunters, and understand that in exchange for significant price savings they are not purchasing from authorized re-sellers or distributors.”  But that just means they wouldn’t be confused about sellers’ identity. “[I]t gives no reason to believe that they would expect the products to function differently from products sold by authorized distributors.” Plus, Bose offered specific evidence of an email thread showing confusion by an actual eBay customer.  Given the presumption plus Bose’s evidence, no reasonable factfinder could conclude that Ejaz met his burden to show confusion unlikely.

Comment: the initial blurb I read about this made it sound like a much broader decision.  If Ejaz had shown that at all times his eBay descriptions clearly disclosed that these were American products and that they wouldn’t work like Australian products, would that be enough?  Would he have to have given every single detail?